Trade Discount is an amount by which producer detract the retail price of an item or Article when it sells to a reseller. For example, Mirzapur Carpet offers its reseller a 10 percent trade discount. The retail price is 500. Kanpur Carpet reseller orders 100 Carpet, for which Mirzapur Carpet grants a 5% trade discount. Thus, the total retail price of Rs.50,000 is reduced to Rs.5,000, which is the amount Mirzapur carpet bills to the Kanpur Carpet reseller. The trade discount is therefore Rs.5,000.